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EigenLayer now the fourth largest Ethereum restaking protocol after cap lift

By:
on Feb 15, 2024
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  • EigenLayer becomes 4th largest restaking protocol after cap lift, $4.3B inflow.
  • EigenLayer’s removal of staking cap prompted the rapid rise in its TVL.
  • DeFi TVL surges to $10B as restaking protocols drive growth.

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EigenLayer, an Ethereum restaking protocol, has swiftly climbed the ranks to become the fourth-largest protocol by Total Value Locked (TVL).

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The protocol’s TVL has surged to nearly $7 billion, marking an impressive 307% increase over the past month, according to data from DefiLlama.

EigenLayer’s rapid ascension

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EigenLayer’s ascent to prominence began on February 5 when the protocol made a strategic move by temporarily removing its staking cap. This decision was driven by the goal of incentivizing organic growth, a move that has proven highly successful.

During the restaking window, EigenLayer’s TVL experienced an astounding 181% surge, soaring to $6.05 billion on February 9 from a modest $2.15 billion on February 5.

EigenLayer’s TVL; source DefiLlama

While a new staking cap has been implemented for the time being, EigenLayer has outlined plans to permanently remove this limit in the future, signaling a commitment to sustained growth and flexibility within the protocol.

Restaking protocols, such as EigenLayer, play a crucial role in the DeFi ecosystem. They enable validators and stakers to restake liquid staking derivative tokens like Lido Staked ETH and RocketPool’s rETH. Beyond securing and validating other networks, these assets can be deployed in various decentralized finance protocols to generate additional yield.

Ethereum validators favoring EigenLayer

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EigenLayer’s appeal extends to Ethereum validators, with a notable statistic revealing that one out of every four Ethereum validators set their withdrawal credentials to EigenPod in the 30 days leading up to February 9. This underscores the protocol’s growing influence and reliability within the Ethereum staking landscape.

The surge in interest in staking protocols started gaining momentum in January, particularly after EigenLayer surpassed $1 billion in TVL on December 28, 2023. As of February 15, EigenLayer boasts a substantial user base, with over 108,574 depositors, holding a total of more than 8.160 million Ether tokens.

Looking ahead, EigenLayer is gearing up to launch its mainnet for operators, allowing investors to operate a staking node. Additionally, the protocol is set to introduce EigenDA, a decentralized data availability service built on Ethereum, in line with its commitment to innovation within the Ethereum ecosystem.

EigenLayer’s role in the DeFi surge

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EigenLayer’s impressive growth is part of a broader surge in the DeFi sector, with the total capital locked on DeFi protocols reaching $71.2 billion – the highest point since June 2022. Liquid restaking platforms, including EigenLayer, have been instrumental in this surge. TVL across these protocols has now reached $10 billion, a remarkable increase from $350 million in December, as reported by DefiLlama.

Restaking has emerged as a pivotal method for investors to earn additional yield on already staked Ethereum. Platforms like EigenLayer facilitate this process, allowing investors staking on Lido to generate an annual yield of 3.7%. EigenLayer’s role in securing Ethereum’s proof-of-stake blockchain further emphasizes its significance within the broader DeFi landscape.

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